Explaining the Law of Demand and Supply in Contemporary Economics

BM533
Contemporary
Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Explain the law of Demand, movement along the same demand curve and changes in
demand curve with factors...........................................................................................................4
1.2 Explain the law of Supply, movement along the same supply curve and changes in supply
curve with its factors....................................................................................................................7
TASK 2............................................................................................................................................9
Compare and contrast emerging theories and models in 21st century contemporary economics
with those of the 20th century, and relate both of these modern business practices....................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The supply and demand model describes how prices vary as a result of a balance between the
availability of the product on each (price supply) and the desires of those with the purchasing
power in each price (demand). The graph depicts a right-to-price increase in demand from D1
and consequently the quantity supply curve (s) moving to D2 with a new market clearing needed
to reach the equilibrium point.
Microeconomics is a branch of economics that studies how the individual components of an
economy, families and firms, typically decide the allocation of limited resources in those markets
Are where goods and services are bought and sold. Microeconomics examines how these
decisions and behaviors affect the supply and demand for goods and services, which determine
prices and how, in turn, determine the supply and demands of prices, goods and services Does.
The opposite happens in macroeconomics, which includes the sum total of activities related to
growth, inflation, and unemployment. Microeconomics also discusses the effects of national
economic policies (such as changing levels of taxation) on previously stated aspects of the
economy.
This project report consists of study of law of demand and supply and concept of contemporary
economics with context to 20th and 21st century. The chosen big retail company is Wal-Mart;
which is one of the rank first retail and wholesale organization in the world.

TASK 1
1.1 Explain the law of Demand, movement along the same demand curve and
changes in demand curve with factors
Law of Demand: The law of demand "when other things remain the same" states that when the
price of a commodity is low, the quantity demanded of it becomes high. On the contrary, when
the price of the commodity is high, the quantity demanded decreases. The law states the inverse
relationship between the price of the item and the quantity demanded (Andrews, 2019).
It is clear from these definitions that the law of demand states the inverse relation between the
quantity of the commodity and the price of the commodity, when the price of the commodity is
equal to other things, then the demand for it decreases when the value of the commodity
decreases. Then the quantity demanded of that item increases. But the law of demand does not
tell how much the quantity of the commodity will increase if the price of the commodity
decreases and how much quantity of the commodity will decrease when the value of the
commodity is high.
Movement along the same demand curve
Since there are many variables that influence the quantity demanded, it is now clear that the
demand curve is constructed assuming that the determinants of demand other than price remain
unchanged. What happens when one of the other determinants changes of the question? We have
to build a new demand curve: the whole curve shifts. If one variation of one of the other
determinants causes an increase in demand - for example later on to an increase in income - the
entire demand curve will shift to the right and, in correspondence of each price, the quantity
requested will be greater. At the price p a quantity equal to Q0 was requested, and now a quantity
Q1 is requested D1 is not necessarily parallel to D0. If instead a variation of one of the other
determinants demand causes a reduction, the curve will move to the left. To distinguish between
curve displacements and movements along the curve, the variation of the demand function by the
variation of the quantity demanded (Volchkova and Turdyeva, 2016).